Higher Rating in World Bank Survey

Taiwan rose to 13th place in the 2019 Doing Business report.

Taiwan moved up two notches from last year to rank No. 13 in the World Bank’s recently released 2019 Doing Business survey. It passed Estonia, Finland, and Australia but came in behind the United Arab Emirates, which soared all the way from last year’s 21st place to No. 11.

Doing Business differs from most international competitiveness surveys in that it tracks the practical impact of specific regulations, especially as they affect small and medium-sized enterprises operating in the largest business city in the economy (in Taiwan’s case, Taipei). The survey, which includes 190 countries and economies, measures and scores the 10 categories of “processes for business incorporation, getting a building permit, obtaining an electricity connection, transferring property, getting access to credit, protecting minority investors, paying taxes, engaging in international trade, enforcing contracts, and resolving insolvency.”

In conducting the survey, Doing Business relies on a network of local partners, including legal experts, business consultants, accountants, freight forwarders, government officials, and other professionals.

For the third consecutive year, New Zealand topped the list, followed by Singapore and Denmark. Taiwan’s chief trading rival, South Korea, slipped from fourth to fifth in the ranking, changing places with Hong Kong. Others that came in ahead of Taiwan – or “Taiwan, China” as the World Bank insists on calling it –were Georgia (#6, improved from #9 last year), Norway (#7), the United States (#8), United Kingdom (#9), Macedonia (#10), and Sweden (#12). China continued its rise up the ladder, improving from #78 last year to #46 in the current ranking.

The 2019 edition is entitled “Training for Reform,” and notes that increased training opportunities for public officials are associated with streamlined business regulations and a higher Doing Business score. The report says that “such training improves experts’ productivity and capacity to serve customers, who in turn become better informed about new regulatory requirements or processes.”

The report also stresses the importance of public communications in improving the regulatory environment, saying that “effective public communication of business regulatory reform not only constitutes good practice, it also improves compliance from the private sector and holds the public sector accountable for regulatory violations.”

In recent years, AmCham Taipei’s annual Taiwan White Paper has similarly emphasized the need for more training programs for working- and mid-level civil servants in dealing with stakeholders, and for greater attention to public communications regarding proposed regulatory changes.

Of the 10 categories in the Doing Business survey, the one in which Taiwan achieved the best score was “Dealing with construction permits,” where it ranked second in the world, behind only Hong Kong. Getting permission to build a warehouse in Taipei, the survey found, entails 10 procedures that typically take 82 days and cost 0.4% of the warehouse value. In contrast, the average for high-income OECD countries is 12.7 procedures over 153.1 days at a cost of 1.5%.

Doing Business credited the improved efficiency with regard to construction permits largely to the creation of a single-window counter in the Taipei City Construction Management Office. It also cited significant progress during the period under review (June 2017 to May 2018) in the area of minority investor rights, noting strengthened protection by “enhancing ownership and control structures in listed companies.”

As was the case last year, the category in which Taiwan performed the worst was “Getting credit.” In fact, Taiwan’s ranking in this area has declined, falling from 90th place last year to 99 in the latest edition. The “Getting credit” exercise looks at two sets of issues – the effectiveness of collateral in facilitating lending and the strength of the credit reporting system, especially the “coverage, scope and accessibility of credit information avail-able through a credit registry or a credit bureau.” It was the latter aspect in which Taiwan’s score was particularly low.

Also good results in WEF survey

Taiwan also ranked in 13th place this year in the global competitiveness survey carried out annually by the World Economic Forum (WEF), retaining its position from last year. The survey measures 140 countries and economies based on such components as the enabling economic environment, human capital, markets, and innovation ecosystem. The United States was ranked No. 1, followed by Singapore, Germany, Switzerland, and Japan.

Within the Asia Pacific, Taiwan’s score was exceeded only by Singapore, Japan, and Hong Kong. As a result of such factors as its low inflation and government debt, as well as its steady GDP growth, Taiwan was one of 31 economies that attained a 100% score in the category of Macroeconomic Stability.

Taiwan also gained a high ranking (fourth place) in innovation, although the WEF noted that its expenditure on R&D as a percentage of GDP has not been increasing. WEF also observed that the Asia Pacific’s “innovation hubs – Japan, [South] Korea, and Taiwan – could improve on the so-called ‘softer’ drivers of innovation to attain the level of ‘super innovators’ such as Germany, the U.S. and Switzerland.”

Don Shapiro is Editor-in-Chief of Taiwan Business TOPICS and Senior Director of the AmCham Taipei. Before joining the AmCham staff in 2002, he was president of the Trade Winds publishing company and Taiwan correspondent for Time Inc.

Taiwan Business TOPICS

Taiwan Business TOPICS is published monthly by the American Chamber of Commerce in Taipei, and covers current topic affecting business conditions in Taiwan, an Industry Focus section on a particular industrial sector, and other reports prepared by the magazine’s staff of experienced professional journalists.